In 2020, the business plan remains the tool of choice for business creators when setting up their business. If it has been criticized for its often lack of realism, it is clear that it can be useful, whether for you or for anything related to finance. It is often a must-have for several reasons.
It forces you to know your market better
The business plan generally begins with a market survey. Many creators generally find this part uninteresting but adhere to the exercise. But if it appears first, it is not for nothing, because the other parts often remain consequences of this one. Even now, you start by studying the trends of your market to know if it is in decline or growth, which induces to take into account the innovations that mean that this sector may not have the coast or the opposite, that it is trend. You thus take into account the new uses that you cannot ignore in your business plan. Then you analyze your market potential and you get the maximum number of sales you can make, knowing that it may be niche and that unless you cover 100% of the needs, you can never grow enough to make a living, knowing that in general , nobody gets an entire potential market and that we generally only grab a few % of it at most. Your market research allows you, especially when these two data have been verified, to take an interest in your direct and indirect competition and position yourself in relation to it. You have to have assets to break through, and price rarely represents a real competitive advantage, because in the price war you are very likely to lose to well-established competitors who may have more solid backs than you. The business gives you the opportunity to decide how to position yourself to penetrate your market and the benefits you need to bring to your customer to break through and finally establish your strategy.
It helps you clarify your vision and strategy
Another reason why the Business Plan is a real success: it gives you the opportunity to clarify your strategy and your vision. A job that can be especially useful if you have partners and allows you to check that you intend to go in the right direction. You thus have a clear guideline, which you will break down into sub-goals and actions. The same actions will make you check that the necessary resources are in place and that the team covers all the needs related to them. So you may be missing a skill and need to acquire it quickly through recruiting, hiring a new employee or simply using a supplier. Thus, you can determine the necessary means to achieve your goal and know how you will achieve it. Taking a step back from the strategy allows you to consider all the necessary means and not to forget certain practices that may seem trivial but are essential to your success. The establishment from the start is fundamental, because you risk spending time on the operation and not taking a step back for certain periods. So you might as well do it from the start!
Very useful financial forecasts
If rarely realistic beyond three years, economic forecasts remain very useful on several levels. Even now, they guide you to determine the basic capital necessary to embark on the adventure and at the same time know your breakeven point, in other words the moment when you will reach profitability. This can take time and will often depend on the growth of your business. You will thus be able to identify whether your resources, especially financial resources, are sufficient to achieve this. Then the financial part leads you to look at data such as the margin of each product/service you sell, its inherent costs and to determine what you want to sell. If many people want to sell many products and have the widest possible range at the start, it turns out that a specialization strategy often takes place with products that attract and others that provide a margin, e.g. So many avoid selling what gives them nothing or emphasize what brings them the most or arrange their inventory of products so as not to amputate the margin and make money. It also generates the fact of asking questions about the cost of acquiring a customer, which often faces the margin. Above all, this part allows you to clearly identify the sales you need to make, in other words, your goals. Depending on your means, you can generally last a certain amount of time, and it is good to know the duration you have in front of you, often to plan the capital, but also the effort you need to make in relation to the resources you can provide. If they are unrealistic, generally over time, they will encourage you to also set your valuation and check that your advancement follows the planned line. Thus, you can sometimes take corrective actions such as communicating more than you had planned.
A fundraising tool
Whether we are talking about opening a bank account or raising money or even calling in certain forms of financial support that involve projecting yourself in time, it is undeniable that this will be useful to you. You must of course reveal your vision to yourself, but often convince partners (especially financial) to join the adventure. It is also useful for you in most competitions, which often represent financial and communication opportunities. However, having the best idea and strategy is not enough for everyone to rush to the gate to invest in you. This document reassures and explains your vision, your strategy and your financing needs. It is therefore also not to be neglected, because it may turn out to be necessary in certain cases, and you will not be able to do it quickly: it takes time.
It will be understood that the business plan is certainly useful in the financial area, but especially for you to formalize all the knowledge, to check that your strategy is on track and that you have the necessary means to clarify your vision and follow it application and possibly take corrective measures. A whole lot of usability that is still hard to put aside.